AngloGold Ashanti dealt blow as Cutifani departs

AngloGold Ashanti, which was rocked by a month-long shutdown of its local mines last year, has been dealt a severe blow following chief executive Mark Cutifani’s resignation to lead Anglo American.

AngloGold announced yesterday that Cutifani would relinquish his post on March 31 to take the reins at Anglo American, ending speculation about Cynthia Carroll’s likely successor after several reports tipped Cutifani to take her post earlier this week.

While Anglo American shares jumped 1.57 percent to R281.10 on the JSE, AngloGold shares touched a five-month low in yesterday’s trade, falling by 2.83 percent to end at R251 as investors worried about the leadership vacuum that Cutifani’s departure would leave at the world’s third-largest gold mining company.

AngloGold had appointed chief financial officer Srinivasan Venkatakrishnan and vice-president of business and technical development Tony O’Neill as joint interim chief executives, the company said.

The timing of Cutifani’s departure comes at a terrible time for the gold producer.

He had been pushing ahead with efforts to stabilise AngloGold following the strike in September and October last year. In the quarter to September, production was 1.03 million ounces at a total cash cost of $866 an ounce, compared with expectations of 1.07 million to 1.1 million ounces at between $835 and $865 an ounce.

Cutifani’s resignation “is a huge blow for AngloGold”, said David Davis, an analyst at SGB Securities in Johannesburg.

Cutifani, an Australian citizen, is highly regarded in the mining industry for his broad range of experience.

During the upheaval last year, he became the face of the industry, due in part to his other role as a vice-president of the Chamber of Mines. In November last year the chamber elected him president, a post he has committed himself to keep until the end of November.

Besides trying to stabilise its operations, the company – which employs 35 000 people – faces the challenges common to its rivals: rising costs, falling productivity, declining ore grades and labour militancy.

“Some of his successes are things that make the South African government feel good, like safety.”

In November AngloGold halved its dividend and reduced planned spending by $200 million (about R1.7 billion at current rates) after all its South African mines were shut temporarily.

It also operates in countries including Mali and Australia.

Venkatakrishnan, who will share the chief executive duties, had been at his current AngloGold post for seven years, the company said.

O’Neill, who has worked in the mining industry since 1978, would join the AngloGold board in the next few weeks, the company said.

Cutifani joins Anglo American as the company looks to reshape itself following a series of missteps.

Anglo’s market value has slumped by $14 billion during Carroll’s tenure of more than five years as the company’s first non-South African chief executive. She was both the first woman and the first person from outside the company to be appointed chief executive.

However, losses at its Anglo American Platinum (Angloplat) unit, which produces 40 percent of the world’s platinum from its operations in South Africa and Zimbabwe, loaded pressure on Carroll.

She ordered a review of Angloplat, which posted a record first-half loss of R464 million and in October cut its 2012 output forecast following strikes.

Carroll’s relationship with investors became troubled after acquisitions such as the Minas Rio iron ore project in Brazil, which suffered cost overruns and delays.

Despite Cutifani’s record on improving safety, labour is apprehensive about his appointment to head Anglo American.

Frans Baleni, the general secretary of the National Union of Mineworkers, said Anglo had “missed yet another opportunity” to appoint either a black person or white South African woman to the post.

The Public Investment Corporation (PIC), a shareholder in Anglo, welcomed the appointment. It cited Anglo’s challenges of capital allocation, project management and operations.

“These challenges dictated a chief executive that is strong in these areas, particularly in operations. Mark fits this profile fairly well as he has broad experience in mining operations and projects across a wide range of commodities and geographies.

“This includes South Africa (50 percent of Anglo’s operations) as well as South America where Anglo has had project and operational challenges,” the PIC said. – Additional reporting by Bloomberg

Comment Guidelines

Has a comment offended you? Hover your mouse over the comment and wait until a small triangle appears on the right-hand side. Click triangle () and select "Flag as inappropriate". Our moderators will take action if need be.

Verified email addresses: All users on Independent Media news sites are now required to have a verified email address before being allowed to comment on articles. You are only required to verify your email address once to have full access to commenting on articles. For more information please read our comment guidelines